Overseas Investment (Urgent Measures) Amendment Bill

I move, That the Overseas Investment (Urgent Measures) Amendment Bill be now read a first time. I nominate the Finance and Expenditure Committee to consider the bill. At the appropriate time, I intend to move that the bill be reported to the House by 25 May 2020 and that the committee have the authority to meet at any time while the House is sitting (except during oral questions), during every evening on a day where there is a sitting day of the House, and on a Friday in a week in which there has been a sitting in the House and outside the Wellington area, despite Standing Orders 191, 193, and 194(1)(b) and (c).

This bill contains measures which the Government considers are needed to be put in place urgently to mitigate the economic effects of COVID-19. As we restore, recover, and rebuild the economy from the effects of COVID-19, it’s imperative that we protect New Zealand’s long-term interests. The bill’s purpose is to ensure that the risks posed by foreign investment can be managed effectively while reducing the regulatory burden of the screening process, and so to support the role of productive foreign investment in our recovery. In particular, we need to minimise the possibility that some cornerstone businesses in our productive economy are sold in a way contrary to our national interest while the pandemic is causing the value of many enterprises to fall.

This is one of two bills I’m introducing as a package. The other, which follows, is the Overseas Investment Amendment Bill (No 3), and it contains the remainder of the provisions that have been included in the previously introduced Overseas Investment Amendment Bill (No 2). It’s my intention that the provisions of this urgent bill that are permanent, which include the national interest test, will be subject to full select committee scrutiny through the normal process of Parliament’s consideration of the No. 3 bill.

The COVID-19 global pandemic and related economic downturn has changed the foreign investment risk environment. Falling enterprise values are increasing opportunities for overseas investors to acquire ordinarily productive firms or strategically important assets at fire sale values without Government scrutiny. That reduced value may not reflect the importance of the business to our economy, and interim controls are needed to protect our national interest. Some of those businesses may be best kept in New Zealand ownership to help our recovery.

Such a sale can on occasions also result in risks to New Zealand’s national security or an offshore transfer of knowledge and jobs. New Zealand is not alone in recognising the need to increase oversight of foreign investment in response to COVID-19. Australia, Canada, and a number of European countries have already taken steps to manage these risks.

Equally, productive foreign investment will play an important role in New Zealand’s economic recovery. Other parts of the current screening regime unnecessarily limit New Zealand businesses’ access to the productive foreign investment they need to survive the crisis and thrive in the recovery. The bill I introduce today seeks to introduce these issues by introducing specific issues to increase oversight of foreign investment in response to COVID-19 as well as broader tools to ensure that we can manage risks associated with investment in our most sensitive assets. We’re cutting red tape to increase our attractiveness to the sort of foreign investment we need for our economic recovery, and we’re strengthening our ability to enforce the Act to ensure these new tools to increase oversight operate effectively.

The Government needs the ability to rapidly respond to foreign investment risks and protect essential interests at this time of unprecedented crisis. This bill introduces a new emergency notification regime which will require overseas persons to notify the Overseas Investment Office of proposed investments of, generally, 25 percent or more in an existing business. Instead of the normal threshold of at least $100 million, the temporary threshold will be zero; it’s what Australia’s done too. This screening power will allow the Government to assess these transactions and, if necessary, consider whether they’re contrary to New Zealand’s national interest or whether they should be approved, perhaps on conditions.

I expect the large majority of transactions will be triaged and approved to proceed 10 working days after notification. A much smaller number of transactions are expected to require a more thorough assessment against our national interest test. The lower threshold for the exercise of the national interest test is temporary. That power will be reviewed every 19 days and will only remain in place while New Zealand is suffering from the economic effects of COVID-19. The emergency notification power is in addition to two other tools that were originally part of the Overseas Investment Amendment Bill (No 2), and this bill carries forward those two tools to close gaps in our screening regime.

Currently, the Government doesn’t have sufficient ability to block transactions that are contrary to our national security, the functioning of our democracy, and other core national interests. This bill introduces a national interest test that can be applied to transactions already requiring consent under the existing regime. This power will be used rarely and carefully, and only if the Minister responsible for the Act considers that it’s necessary. This will ordinarily be the Minister of Finance—not the Minister to whom most Overseas Investment Act decisions are routinely delegated. This national interest test is modelled on the Australian equivalent, which also has a wide discretion rarely exercised.

The second new power is a narrow call-in power that will enable Government to review, on an enduring basis, investments in some strategically important businesses such as firms developing military and certain other advanced technologies that may pose significant risk to our national security or public order. That call-in power ensures that we can manage these risks permanently.

Foreign direct investment remains important to support our recovery, and this bill also brings forward some measures to cut red tape. Cutting red tape means encouraging investment by reducing the number of low-risk transactions that are unnecessarily caught by the Act. It does this by addressing screening of purchases by majority New Zealand - owned and controlled entities; investments in land that are caught up currently but have little economic, cultural, or environmental value, perhaps because they sit next to, or an example is reserves, like a sports field—sorry, I should say that again. An example is land that sits next to a reserve like a sports field that’s currently caught, and there are also a range of small transactions that don’t grant meaningful control over or access to sensitive New Zealand assets that are also currently caught which we’re removing from the ambit.

Cutting red tape also means clarifying and simplifying the consent process, including focusing the requirements for assessing an investor’s character on the factors that matter most, such as proven serious offences, and requiring applications to be processed to a deadline, giving investors the confidence they need to come here to invest. We’re also bringing forward a number of new enforcement measures that were originally tabled as part of the No. 2 bill to ensure that our reforms operate effectively. I won’t list them now.

Recognising that the use of some of the tools could be challenged in court, the bill includes provisions to ensure that natural justice rights and classified security information can both be adequately protected during any court proceedings. More broadly, there’s an ongoing piece of work responding to the work by the Law Commission in relation to the use of national security information in courts, and Parliament should expect to see the outcomes of that work at a later date.

Finally, recognising that the response to COVID-19 is challenging and changing, this bill introduces temporary regulation-making powers that can be used to address transitional issues that might arise. These powers include, for example, the ability to allow modifications or exemptions from the consent requirements while the emergency notification power is in place.

In conclusion, the bill supports New Zealand’s interests at a critical time by increasing oversight of foreign investment while also cutting unnecessary red tape. New Zealand continues to be open for business. Productive foreign investment has been and will continue to be welcome, and I commend this bill to the House.

Thank you, Mr Speaker. I would like to speak on this bill, the Overseas Investment (Urgent Measures) Amendment Bill, which we’ve just received. There are elements of this bill that we, clearly, support and understand. The introduction of a national interest test is something that the Australians have introduced, particularly in relation to strategically important businesses that have the potential to have military or dual-use technology. So we understand the need for urgency around that in the context of this incredible economic situation that we’re facing at the moment, where over a very short period of time many businesses have been thrown into absolute confusion, with a collapse in revenue and, in many cases, a collapse in value. So we understand the impetus behind this bill.

We do have concerns about it as well—significant concerns—particularly in the absence of any threshold whatsoever. I struggle to understand how the tranquillity of the Realm and the interests of New Zealanders would be badly affected if a company worth $1 million or less was sold to anybody in particular, and so the absence of any threshold means that what we’re seeing, potentially, is sand being thrown in the gears of the flow of investment into this country. Of course, what we’ve seen in this Budget, only read sort of a couple of moments ago, is that the country has fallen into a massive economic hole, where we’ve got 150,000 jobs potentially being lost and $140 billion of extra debt, or about $80,000 per household, falling on New Zealanders. So the most critical thing that we need as a country over the next year is to grow, and a growth plan, and we have some criticisms about the absence of a clear growth plan in the Government, which we’ll talk about at other times.

The most fundamental driver of growth and new jobs, if not new opportunities, is private sector investment. If we are to take the view that we will rely solely on domestic investment, then we’ll grow very slowly, because there is a limited pool of savings, and throughout the history of this country, if we wanted to grow faster we’ve relied on foreign investment as well.

There is a kind of a mood that seems to be sweeping across this Government that all foreigners are to be treated with great suspicion, and we don’t necessarily go along with that. We do recognise the need for foreign investment. So the issue with this is that every single investment over these thresholds, whether it’s $50,000 or $5 billion, will go through this process. The Minister assures us that it will be swift: 10 working days—well, you know, I don’t know. I don’t know how confidence—

💬 Hon David Parker: The triage—the triage is 10 days.

That’s the triage, and if there is a flag flown, then it’s up to 30 working days, and that’s quite a long time if you’re trying to decide whether to make an investment. If you’re in a big bad world out there wondering what you’re doing, you’ve got the whole world to potentially invest in and you look at New Zealand and you see these hassles, it may put off some investment that would make a difference.

So, anyway, I’m relieved that that the bill is going off to a brief discussion with the select committee. On that basis, we’re prepared to send it off to the select committee and have some consideration of it, noting our reservations about the absence of a threshold and the potential that it would have to make. At a critical time when we need investment, it could put off some of the investment that we would value and that would actually make a difference in terms of keeping some businesses afloat, because there will be many businesses across this country right now that are in desperate straits that employ New Zealanders, and it may well be that capital and resources coming from offshore might save those businesses and keep them going. If we turn off that tap and if we make it too difficult for that capital to arrive, that could compound the problem that we have with jobs in this country and make the situation worse. That’s not something that I think anybody in this House would want to do, and I’m sure the Government doesn’t want to do that as well.

So we recognise the problem that they’re trying to solve around the national interest where it relates to security, and we recognise the issue, to a degree, in terms of compressed values through the crisis and the dangers associated with that, but we are very worried about the impact that this would have on jobs and the ability for the country to grow. So I think that covers the issue in the sense that we’ll send it off to select committee and have a look at it. We are voicing some reservations, and we hope the Government would be willing to consider some of it—particularly the thresholds—and some of the issues that we’ll be discussing over the next few days. Thank you, Mr Speaker.

I wish to take up a few of the points that have been raised by Paul Goldsmith, the previous speaker, because even though the previous speaker has expressed some reservations about the bill, he does zero in on what are the critical issues: how do we ensure that we protect the viable, the good, the solid businesses in this country, and how do we ensure that we continue investment in this country but at the same time, how do we make sure that the assets in this country are not sold at fire sale prices?

Mr Goldsmith said that we need private sector investment in this country, and he is quite right, but what we do not want is rapine and pillage. We need to get the balance right, and that is what this bill is all about: trying to get the balance right between continuing foreign investment in New Zealand—much-needed and welcome foreign investment—but, at the same time, not enabling all the assets that we have built up in this country through many years of hard work to be sold at a time of great distress. We do not want sales of distressed assets if they are unnecessary at this time.

So that’s the balance we are trying to strike with this bill, and the balance goes a little bit further than that. It’s a balance between welcoming foreign investment and shutting it down, and we see this in the bill as drafted that rather than this being the permanent settings that we will have in place for foreign investment in this country, the intention is that this bill has a sunset clause and that the powers in it be subject to regular review. It is in many senses an urgent measures bill but it’s also a temporary bill. It is temporary because we would not want to have settings that discourage foreign investment in place permanently, but we do need them at this time.

So we need to examine whether we’ve got the balance right on the sunset clause, on how often it should be reviewed. We need to examine whether we’ve got the balance right on the threshold. Should it be zero? Perhaps. We need to have a think about whether a process of triage really will work effectively.

The triage idea is quite straightforward as well. It turns out that often it is very easy to make a judgment at one end of the scale that something is completely acceptable and it’s easy to make a judgment at the other end of a scale that something is completely unacceptable, but it’s the area in the middle that is difficult. The process of triage that the Minister referred to that the Overseas Investment Office will be required to follow to ensure that there are quick answers takes advantage of the fact that the judgments at either end of the scale are actually quite easy to make. It is those judgments in the middle where we will need to review foreign direct investment in this country, and, at this time in particular, we need to ensure that we are protecting the major assets of the New Zealand economy, whether they are held in private hands or public hands. Assets that have been built up by New Zealand businesses are New Zealand assets, and we need to ensure that they are protected.

So this bill will not stop overseas investment. All it will do at this time is place an extra hurdle—and, at this time, a much-needed hurdle—in terms of investment.

I’m looking forward to the process in the select committee, where I’m sure that people will grapple with it. It will be an intense process and a very short one, but one that I think will befit this bill. We do need to get something in place quickly, so we will move it through the Finance and Expenditure Committee with due consideration, and I’m looking forward to engaging with the members of that committee in examining this bill and making sure that we get this balance right, as we need to at this time. I commend this bill to the House.

It’s fascinating, after listening to the Budget speeches from the Government and supporting parties, that the very first bill that we see under urgency in support of the Budget is one to stop a flow of capital into New Zealand. We heard the other day the Rt Hon Winston Peters talking about that ever since 1882 and refrigerated shipping, New Zealand’s been a trading nation. We’ve also been a nation that has been built off the back of foreign investment on our shores. That is an undeniable fact, and here we have today a Government that is making it harder for foreign investment to come into New Zealand because somehow it’s being portrayed as a big bogey that takes things away from people. Well, it has contributed an enormous amount to what New Zealand is today to this point.

I think the speech we just heard from Deborah Russell was interesting. It was almost a continuation of the theme that we heard at the COVID select committee a couple of weeks ago, which was that if businesses are undercapitalised, they just fail—tough luck. The comment here that if a distressed business was somehow sold at a fire sale price, that’s a terrible thing to have happen—it misses the point that if that business maybe wasn’t sold, it might fail, and if it fails, who loses? New Zealand’s local investors lose. The people who have their jobs there lose. The value of that business inside the chain of activity in the economy is lost.

So there you go. It would seem that we have a Government that wants on the one hand to say they’re friendly to business, but on the other it wants to bring in as many rules as possible to prevent individuals making their own choices inside the economy. This bill puts it all back on one Minister. It’s a bit like that section 11 stuff yesterday—it all goes back to one Minister. It is a theme coming through strongly that under the cover of doing things for the protection of New Zealanders from the evils of COVID-19 and all its unintended consequences, then we’d better have total Government control on all aspects of New Zealanders’ lives.

So we don’t like this bill, and I am looking particularly at the bill that talks about the national security interests. We were told about this bill earlier today, and the SIS and the GCSB have said, “Well, we need to give you a briefing on it.” But guess what? Not till tomorrow morning—not till tomorrow morning. So the aspects of that can’t be considered by us when we’re debating this bill today.

It’s quite an unreasonable position to be put in. Earlier in the day, we got the notification of what the urgency motion would contain. I thought, “That’s great. The Government’s being right up front with us for a moment, and a little bit transparent.” But then, what did we get? A completely different list.

Right now, we were told we’d be debating a bill that was going to, effectively, make one Minister in charge of all the infrastructure spending—all the Resource Management Act consent stuff that the Government’s talked a lot about, that Winston Peters today congratulated the Minister on. But where is it? Not here—not here. Something that might actually, practically, do something to get consents on projects, to move them forward—can’t see it, not here. And we know why—we know why—because the Government in its entirety, across its coalition, doesn’t have the numbers. So what do we do? We come up instead and put up a bill, followed by another bill that’s entirely determined to, for a period of time, they’re saying—just a short period of time—close down some of the opportunities for foreign capital to assist businesses through a very difficult time.

It’s not hard for anyone to work out that in a time like this, for many, many companies around the world and many individuals around the world, the concept of capital protection will be very much to the fore in their minds. That’s where they’ll say, “Well, where do I invest? Where is a place that is safe to invest?”, and the Prime Minister gave the answer to that today, in her speech in the House. She said that New Zealand will benefit from being a country that dealt so decisively to the COVID-19 threat and that New Zealand’s trade will be enhanced by the COVID-19 threat response. Well, so will New Zealand’s reputation for being a safe place to invest capital, and—I’ve circled back to where I started—the capital that has built this country over decades, since 1882 and before.

So we’re very disappointed that the Government is bringing in these measures. I don’t think there’s too much need to say an awful lot more. We want to see it go to a select committee so that some of the foible of it can be exposed as it is discussed by those who submit to that committee. It’s only a very short time—incredibly short time—but, as we’ve learnt, it’s an unusual thing for any bill under this circumstance to go to a select committee. So what I would say is that we will support it to that select committee, but with very severe reservations and deep concern that at the one time when New Zealand might have been wanting to make it a little easier for some companies to bring in—some companies. Remember, when we say “companies”, for some employers—some places of New Zealanders’ work—to be able to get the capital to maintain those jobs and to maintain the trade that goes from the productive output of those jobs could’ve been made a little bit easier. This does not do what the bill claims in its purpose to do.

Kia ora, Madam Speaker. So I rise on behalf of New Zealand First to speak to the Overseas Investment (Urgent Measures) Amendment Bill. The contribution by the member who just resumed his seat, the Hon Gerry Brownlee, was an interesting one. He put forward a proposition that suggests that never before has there been urgency after a Budget, never before has there been bills placed on the Table for the Opposition to see just after the Budget speech has been made, and never before has the Opposition actually had to get up and go and do work really, really quickly for the benefit of this House. Having sat in those seats, it is with some irony that you listen to that particular member, knowing how often it was used and how often we would see a paper with something like five minutes beforehand. But, you know, I understand what it’s like in Opposition; and so you build an argument and you rewrite history.

New Zealand First supports the bill. The bill contains measures which the coalition Government considers need to be put in place urgently to mitigate the economic effects of COVID-19. It should come as no surprise that the Opposition—well, at least one of the Opposition—speakers have already argued that we should open the borders to whoever wants to come in and buy us. It will be no surprise to anybody listening that New Zealand First, who has always stood for investment and who has always understood and acknowledged that some of that investment will come from offshore, refuses to accept that everything we have and everything we are should be up for sale to somebody else, and particularly at this moment.

So the bill’s purpose is to ensure that the risks posed by foreign investment can be managed effectively, while reducing the regulatory burden of the screening process to support the role of productive—and there is an interesting word. There is the key word. New Zealand First and the Rt Hon Winston Peters have articulated it before—that any such investment from offshore must enhance New Zealanders’ futures, and not just the profit margins from those offshore and line their pockets. It must be productive foreign investment in our recovery. In particular, we need to minimise the possibility that cornerstone businesses in our productive economy are sold in a way contrary to our national, long-term interests while the pandemic is causing the value of many businesses to fall.

Mr Brownlee said that this was putting in roadblocks. Inside this piece of legislation, and of equal importance, is the need to attract productive foreign investment to support our recovery. As a result, this bill brings forward some measures to cut red tape. I would have thought the Opposition—I think they rolled out a series of speeches about cutting red tape—would have celebrated this particular part of the legislation.

Cutting red tape means encouraging investment by reducing the number of low-risk transactions unnecessarily caught by the Act, including the screening of purchases by majority New Zealand - owned and controlled entities, investments in land that has little economic, cultural, or environmental value because it sits next to a public park or sports field, and a range of small transactions that do not grant meaningful control over or access to sensitive New Zealand assets. Cutting red tape also means clarifying and simplifying the consent process for the transactions that will continue to be screened with longer-term changes, including focusing the requirements for assessing an investor’s character on the factors that matter the most, such as serious proven offences, and requiring all applications to be processed to a deadline, giving investors the certainty and confidence they need to come here to invest.

New Zealand First understands that we require investment on our way out, but we will not sell our souls to get there. We support the bill.

Oh, thank you, Madam Speaker. Look, I just wondered if that member who’s resumed her seat has even read the bill that she’s supposedly spoken to. It sounded more like a campaign speech from New Zealand First from 2002, when they went all over the country telling everybody that the Government—and that was the Government that they were part of—was allowing land to be sold to foreigners. I have no idea where those foreigners were taking that land, but, apparently, they were. Of course, the issue then, in those days, was not the usual bogeymen for the New Zealand First Party of the Chinese investor, but, in that case, it was the American investors, because they were the bad people in those days.

I think it’s very important for the Parliament to consider one of the other comments made by the member who’s resumed her seat, and that is that she said that there’s a lot of people who are going to, basically, go broke in this country—

💬 Hon Tracey Martin: No, I didn’t. Don’t mislead the House.

—there are a lot of businesses that are going to find it very hard, and there’s not much capital floating around. I think that’s a very good paraphrase and a very fair thing.

💬 Hon Tracey Martin: I didn’t say any of those things, actually.

Well, she’s now denying she’s said that, so, obviously, she thinks there’s lots of capital floating around and there’s lots of people who aren’t going to go broke. Well, I’ve got some news for the member who’s resumed her seat, and that is that that’s actually pretty much the whole world at the moment. So there is not a lot of cash floating around the world or looking for a home to be in, and that’s one of the problems that we’ve got in New Zealand.

So this is legislation very much modelled on the legislation from the Liberal-National Government in Australia, which, of course, went to the extent of forming a grand coalition to deal with the COVID-19 situation, unlike the current Government in New Zealand. I think one of the things that they’ve said there was that they were worried about fire sales, as well, of Australian assets which are really productive assets, and people can understand that. I can understand that people feel very frightened that this is going to happen.

One of the problems that we have is that we have a lot of small and medium sized businesses in New Zealand, and we have some larger businesses too, that will actually end up closing if they can’t get investment. It’s all very well to rail against the foreign-owned banks—as the member who’s resumed her seat often does, through her party—but, actually, it was the foreign-owned banks that helped get us through the global financial crisis, as well as a very good National-led Government.

But I think it’s really important to understand that people do have concerns that there may be situations where there can be a New Zealand investor in interests and businesses, but you just need to be very careful about who is this New Zealand investor. Is it going to be some form of State control and ownership of everything that’s productive? Who is going to take up the slack that’s going to be left? So what’s going to be the—

💬 Hon Andrew Little: We’re not going to have the dancing Cossacks, surely? It’s not the dancing Cossacks, again—please.

The Hon Andrew Little says it’s not going to be the dancing Cossacks. Well, I’m pleased that it’s not going to be the dancing Cossacks, because, I must say, it might be time to bring them out if it is. But it is important to consider that this is a very genuine concern. We certainly would never, on this side, talk about the dancing Cossacks, but if the member really wants to, I am happy to do that all day long—if he really wants to.

But it is important to understand that if someone is to have a New Zealand business and they need capital, what are they supposed to do? The Government says you can borrow it. Well, what if there’s not enough asset value there to borrow against, or if there is not enough income to pay the bills? These are the issues. So does that then mean that the business would have to actually close, and the answer would be yes, because, of course, they would be trading insolvently, in many cases. So there are issues here that we need to be very careful about.

We have, in the National Party, not seen this bill until really, effectively, now, and we have not been able to go through it as a caucus yet to consider the ramifications of it all. So we have decided, because we are aware of the concerns that will be out in the community about a fire sale of some of the big New Zealand assets where the Government’s interventions may, in fact, have harmed those assets, that we do need to consider whether or not something of this bill can actually be saved in select committee. We are assured by the fact that it is going to a select committee, which is better than no select committee, unlike some legislation these days, just passed recently—in fact, yesterday—and what I would like to say is that in the select committee, we’re going to be asking some very hard questions around the fact that there seems to be no limit, no threshold, where there is this intervention.

That’s something, I think, of great concern to people. If it’s a big, billion-dollar thing, people might then consider it. But also, what if it’s an asset that’s of a million dollars or half a million dollars, which actually, to be frank, is about the price of a house?

So we do need to be very careful. We will look at this very genuinely in the select committee and we will look to see if we can find some way in which to support it further. But we give no guarantees whatsoever other than to treat it in a very serious, sober, and careful way.

I just had the joy of googling the dancing Cossacks, and so I have now, for my benefit, just had a very interesting political history lesson. So I thank the colleagues on the other side of the House, and I look forward to watching that full YouTube clip in due course.

This House at the moment—we are all living through a particular period of time that calls for extraordinary measures, and this is indeed a bill that is very necessary right now for our economic security. It’s not lost on all of us the significance of what kind of economic stimulus will be required over the next, not just short period of time, but quite some time. Globally, we can see, internationally, markets are dropping all over the place, so this here is a very necessary measure to ensure that New Zealand’s economy is protected. It is specifically to aid in our recovery. Stepping back, something that I think both sides of the House can agree on is that for a very long time, New Zealand has needed a national interest test.

Now, I note that my friend the member from Ilam made some comments about not being able to see anything, and this, that, and the other thing. Well, some of the measures in this bill are measures that I understand they were offered a briefing on just prior to COVID intervening and stealing the thunder. So I do know that there have been attempts, at least from this side of the House, to enable our friends from across the aisle to have a detailed perspective. So I wanted to put that on the record.

We are living through extraordinary times. It calls for extraordinary measures, and this bill here, the Overseas Investment (Urgent Measures) Amendment Bill, is to assist us to do just that. I commend this bill to the House.

Madam Speaker, thank you very much. I’d like to say it gives me pleasure to speak in this debate, but it’s hard to do so when one considers the ramifications of what this Government is trying to push through, again, one assumes, in a very short-fashioned way.

New Zealand is a country that relies upon foreign direct investment. Without it, our economy cannot grow. There are few parts of New Zealand that haven’t benefited or don’t benefit from the investments that come from overseas. It is right that we have rules around how this money comes into the country, the conditions with which it can be invested, and rights and obligations on all sides, and every Government, for periods of time, have grappled with how to get this balance right.

However, for this Government now, under the guise of a Budget with the considerable economic harm that’s being done to the country through COVID-19, to bring this bill forward and say that they believe it’s in the best interests of the country, having delivered it to us only just now—and again we find a chance where they rush things through, and haven’t we seen over the last two weeks how wrong they can get things when they rush things through? The wrong tax bill was passed into law in two hours, but the Prime Minister couldn’t meet her promise to New Zealanders of almost a month ago and bring forward a bill to reduce her and colleagues’ salaries by 20 percent in, say, one hour.

We now have this bill that may have considerable effect upon the view of people overseas who are responsible, legitimate investors that have an interest in New Zealand to come here and to invest to do so. The reason I say that is when we get investment from overseas, if it’s done in the right way, it creates jobs, and what we’ve heard is that the country needs jobs at this time more than anything else.

The Government needs to be focusing on saving jobs sustainably and focusing on creating sustainable jobs. I think that what we will see with the announcement of the extension of the wage subsidy for eight weeks for some companies is an ongoing masking of what’s really happening in the economy and the degree to which unemployment is going to increase. The reason for that—

💬 Hon Tracey Martin: Would the member stop that subsidy?

Well, it’s one thing to sit there and chirp a little bit—it’s one thing to chirp a little bit when you’ve just spoken—but the great thing about this Parliament is it is an opportunity to have a debate. You’ve had your chance, and how about someone else has a chance now?

So the point here is that that subsidy has been welcomed by the National Party, and it has helped New Zealanders in their time of need. What it will now do is allow a number of companies to keep those New Zealanders on their books as they try to see what will happen to them in the coming period of time. It’s a good thing for those individuals. However, that is not enough, unfortunately, to keep New Zealanders in work, and what it is likely to do is mask the level of unemployment that is coming. It puts it off for a period of time for those people that get to keep their jobs during that period of time. That’s an important thing, but what I’m actually talking about is every time we get a responsible foreign direct investment in New Zealand, jobs are created, and they’re not created by the Government and they’re not created by the taxpayer. The Government and the taxpayer then has taxes to spend on other things that can be better used in the economy—health and in education—and in this case, what we’re seeing is legislation before the House that is not likely to create more jobs. It’s likely to restrict the private sector creating jobs at a time when the Government are also using taxes to support jobs directly.

That’s the reason that we need to take some time to really understand this and have a very good, close look at it, because, again, it’s another piece of legislation that is just dumped upon us. But we’ve had every speaker in this debate in the Parliament earlier stand up and talk about what we need to do for New Zealand to get it back on its feet. Well, actually, backward-looking legislation—restrictive legislation when it comes to making things more difficult for business in New Zealand—is not about moving forward; it’s actually about going backwards.

We’ve also heard that there is funding available in the Budget for exports. The thing about exports is it is also about attracting investment to the country. So on the one hand the Government is spending hundreds of millions of dollars to help New Zealand companies do better overseas and to be able to find ways to diversify and sell more in markets overseas, and, in fact, it’s no different than every other Budget we’ve seen from any other Government. We did it when we were in Government. We made sure that there was support for an export economy because we are an export nation. But at the same time, we then have this legislation brought forward which creates more restriction, not less. It’s not about actually opening the economy up in a way, responsibly, that creates jobs and gets the economy growing; it’s about making it more difficult, more cumbersome, and more costly to be involved in the New Zealand economy and to invest in the New Zealand economy, and I just wonder why.

I just can’t understand or comprehend why the Government would do that at this time, when every single business person in New Zealand and every single employee in New Zealand wants to go back to work, wants to look for more markets, and wants to find more investment, but doesn’t want more debt and doesn’t want more borrowing. They want more customers. They want to partner and they want to have people invest in the productive parts of New Zealand, and this bill makes that more difficult. In particular, it’s because it creates rules that the Government get to use themselves that we will find as this debate goes forward will make no sense at all, and they’re not likely to make a lot of difference to the investment regime in as far as, actually, what is allowed and is not allowed, I suppose, but it will create great complication and great cost for those in New Zealand who find investment and for those overseas who want to responsibly invest in New Zealand.

I think what the last speaker in this debate needs to do, if she takes another call, is to explain very carefully why they don’t like foreign direct investment, because that’s very much the message that is sent. Is it just about the foreigners? If we just called it direct investment, would they be in favour of it? If they just called it direct investment, would they be in favour of it, because what we’ve heard time and time again is the reasons why they don’t like people investing in our economy.

That’s the big problem that we have from this Government: the signals that they send around the world about whether or not New Zealand is open to the right type of investment that will grow the economy, that will produce things that we might not otherwise, and that, at the same time, will create jobs for New Zealanders, and the signal that’s being sent by this legislation, and that last speech and almost every other speech that we’ve heard from the Government, is “No, we don’t want to be a welcoming economy. We don’t want people to feel that they can come here and investment.”, and, at the same time, that means they don’t want the private sector, in partnership with others, to create the jobs. I think they believe it is the Government’s job, and sole job, to control that and to do that.

We will have more opportunities to talk about this in the coming period of time, but I ask the Government to take their time and to reflect, and not to rush because they think that when a Government passes legislation quickly, they are seen to be a hard-working or responsive Government. That’s certainly not what we’ve seen over the past weeks, when they introduced the wrong legislation to the House and passed it in short order in two hours, and then went out and announced it as if it was actually meant to have happened and it wasn’t a problem.

That’s the reason that this House should take the time that sits in the Standing Orders to get things right. When there is a need for urgency, we should do things urgently. Often, when things need to be done urgently, two sides of the House join together to do that, but we shouldn’t be using urgency for the sake of rushing things through just so we can be seen to be doing something, and this legislation should take its time.

💬 Hon Gerry Brownlee: A $140 billion Budget, and this is it.

That’s right. Well, there you go: a $140 billion Budget, and the first thing they do is say that we don’t want to create jobs through foreign direct investment. If you get that wrong, it’ll have to be a $141 billion - debt Budget—

💬 Hon Gerry Brownlee: Where are they borrowing the money from?

—because, actually, Mr Brownlee, it has to come from somewhere else.

That’s a good point, and a final point: when it comes to foreign direct investment, the $140 billion—that’s $80,000 per household in New Zealand. That’s one heck of a second mortgage that this Government has to borrow—

💬 Hon Tracey Martin: Run out of material.

I ask the Hon Tracey Martin, where will that come from? Where will that come from? Will it come from overseas? Will it come from foreigners? Will it come from people overseas who, through their banks, decide that they will invest in the Government of New Zealand, or will it come from, actually, hard-working New Zealanders?

The one thing I do know of that $80,000 per household additional debt is it will be paid back through higher tax rates on the part of hard-working New Zealanders.

I understand this is a split call.

Thank you. Look, despite the flailing around there, it’s good to know that the National Party is going to support this excellent piece of legislation through to a select committee, because we actually do agree on that thing. If the member had listened, he would have known that on this side of the House, we are absolutely in favour of sustainable, long-term, high-quality foreign investment. But in these extraordinary times, values are volatile and in some cases they are tumbling, and the existing threshold of $100 million just isn’t right.

Now, we have seen businesses which have some real, fundamental strengths and strategic importance, and the risk is that their values will plummet. The hyenas are circling around the fire, and on this side of the House we say no, we will not allow them to tear, limb from limb, the jewels of New Zealand industry and business. We will wait and we will support those businesses, and if people want to come to this country with good money to invest in the long term to support New Zealand, we welcome it. But we will not be the victims of international scavengers.

This, however, is an extraordinary measure. It’s not here for ever. That measure in particular is here for the time being—while those market conditions are extraordinary. So once those market conditions settle down and once the economic conditions return to normality, those provisions will be set to one side and will not be being used.

So that’s why this is a good bill. I look forward to sitting on the select committee, having a robust discussion with my friends from the National Party, and seeing this through to becoming yet another plank in our response to the COVID-19 crisis. Thank you, Madam Speaker.

Thank you, Madam Speaker. It’s a pleasure to be talking on this new bill, the Overseas Investment (Urgent Measures) Amendment Bill. If I recall and understand what the Minister said when he introduced the bill, this bill is basically about stopping fire sales of businesses in New Zealand and, with that, the loss of intellectual property and jobs overseas. I think that at a high level, there is merit in that argument, for sure. However, what I find slightly disconcerting is he then went on and used the term “triage”, and, to me, that has a rather negative connotation about the way you look at approval of foreign investment. It implies a negative connotation, and I think that is wrong. We are talking about foreign investment in New Zealand, and, as many of the speakers have noted previously, it has been very beneficial for New Zealand.

I think the big issue here—and this is what the crux of this bill will be about—is there are good forms of foreign investment and there are poor forms of foreign investment. In the main, there are many good types of foreign investment, and the classic I want to talk about is, for instance, if a company is in trouble—and we’ve seen the Auckland Airport do a significant rights issue recently. If that company wants to get fresh equity so it can recapitalise and grow its business or expand its business, that is fine, and that type of foreign investment should be allowed. What worries me in this bill is that all the good stuff and the bad stuff is going to be put together into one little box and pushed through the Overseas Investment Office (OIO) under strict requirements to do it within 10 days, and also the whole processing at 25, 50, 75, and 100 percent takeover—each of those thresholds just double up the requirement to be able to make that happen.

The other thing is it, obviously, builds on this issue around the national interest test and the call-in powers. No one’s mentioned it yet, I don’t think, but the national call-in powers and the national interest refer to industries such as national military or security companies, telecommunications, electricity, ports, airports, financial institutions, and, of course, the media. Those are the types of categories that these provisions will relate to particularly.

I think that in terms of looking at this bill at the select committee, the first thing is making sure that its focus is very, very confined, because if it starts to impede businesses who are currently in trouble, and who need capital and can’t get that capital other than going locally, then that’s a real issue. This bill, actually—what it’s done is hung out a shingle to many people from overseas to say “If you want to do it, even though you’re going to be fast-tracked”—supposedly—”under this system, you will have to still go through quite a rigmarole.”, at a time when New Zealand companies need that money quickly. So the focus will be around its purpose and scope.

The second thing is around the definition of the national interest, because I think it says in the bill that the Minister can “impose conditions on, prohibit, [and require disposal] of investments”. So it’s quite wide-ranging powers.

The third issue is the definition and scope of the call-in powers, and I think that will need a lot of work on it, because that is a heavy-handed right. The fourth thing is the capacity of the OIO. If you talk to any lawyer who has been involved in OIO processing—and I did, recently—they will normally say that the process for doing foreign investment in New Zealand is time-consuming, and my first question is we’re now doubling up on it, requiring it at 25, 50, and 75 and 100 percent thresholds. That means the resources of the OIO will need to be resourced. I don’t see anything in the Budget for that, and so how that’s going to be done is another issue.

The other issue is the approval by one Minister. This is, again, a heavy-handed approach—and whether that’s appropriate—and, finally, the criteria when these emergency powers should be disbanded or discontinued will need to be addressed.

All of that means that we’ve got a lot of work to do in a Finance and Expenditure Committee meeting over the next week. I’m just wondering who’s going to turn up as submitters. I don’t think we’ll get any foreigners, because they’ll see this bill and think they won’t want to go near it.

The next call is a split call.

Thank you, Madam Speaker. I rise on behalf of ACT in opposition to these bills. The history of New Zealand is a history of foreign investment, and, if you doubt that, let me tell a story. In the beginning, there was no foreign capital in New Zealand, and then Kupe showed up with his waka hourua and a few kunekune pigs. That was the start of importing foreign capital, and we’ve never looked back.

There are two reasons why that matters: first of all, capital is important for jobs. A job without capital is called a labourer. I’ve been a labourer in parts of my life, and even the proudest labourers will tell you that if you don’t have capital, you can’t earn much money. So capital is important for raising wages. The second point is that there’s a lot more capital overseas than in New Zealand. That’s why our history is a history of foreign investment.

But it’s a funny old thing that New Zealand is an outlier amongst democracies, because most of the xenophobia is on the left. Never forget it was our Labour Party of the Chinese-sounding names publicity stunt, and it was our left-wing Government that introduced the oil and gas ban that has investors around the world scratching their heads, saying, “Do these guys want to be part of the First World and the 21st century or not?” Then came the Overseas Investment Amendment Act at the beginning of this Government that further sent the message that this country wants to replace Fiji as the largest group of Pacific Islands.

This bill makes worse a situation where New Zealand is among the most hostile destinations for foreign investment in the OECD, and the Opposition—I say, how they don’t know that? They don’t know that it’s almost easier to invest in Indonesia or in Saudi Arabia than it is in New Zealand, and it needn’t be so. I say to the xenophobes that if you don’t like foreigners, foreign investment is for you. Why? Because immigration is when foreigners come and live here; foreign investment is when they stay home and just send their money. Even the most xenophobic parties in this Parliament should think that’s a good deal.

So this bill comes along and, at precisely the time when New Zealand businesses are going to be desperate for investment capital so they can keep going and keep jobs going and maybe hire more people, this Government is introducing legislation, as the first Act of this Budget, that makes it even harder for foreigners to send their capital to support businesses and help jobs. The greatest irony of all is that in this Budget, this Government is borrowing $140 billion, and, if it’s not the $60 billion that the Reserve Bank is just going to print, it’s the other $80 billion that’s going to come from offshore. So the Government is importing foreign capital, but the private sector can’t. How crazy is that?

That describes the problem with this Government. It is trying to manage the economy from the Beehive, and that’s inadvisable for any Government, but especially foolhardy for the Government that gave the world KiwiBuild. It is now trying to rebuild the whole economy. Phil Twyford’s going to be there with his high-vis vest and his hard hat, trying to rebuild more than just the cluster that he had with KiwiBuild and houses. They’re going to KiwiBuild the whole economy.

That’s why New Zealanders should be concerned, and that’s why the ACT Party, the only party consistently standing for a free and open economy in New Zealand, is proud to stand alone in this House in opposing this myopic, inward-looking, backward build. Thank you, Madam Speaker.

I’m delighted to take a call on this bill. If there was ever a bill that highlighted the difference between the Opposition and the Government, it’s this bill, because we’ve heard speeches from the Opposition who want to sell out New Zealand—who want to sell New Zealand - owned firms overseas. What we’re saying is we need to keep New Zealand businesses for New Zealand.

We’ve got a Government here who are taking a long-term view, because the reality is when the businesses are sold, they’re sold. When they’re gone, they’re gone. Somebody once said, “We don’t want to become tenants in our own land.” I wonder who said that, and I think the Opposition members should think about that—we don’t want to become tenants in our land.

It’s appropriate that this bill comes first after the Budget, because the crux of this bill is about protecting New Zealand interests. There’s been a growing sense of pride in New Zealand in terms of our response to COVID-19 and within that growing sense of pride there is a sense that we need to keep New Zealand for New Zealanders, and that’s what this bill does, in a balanced, practical way. I’ll be interested to see how the Opposition vote after a few more speeches, because I expect they will vote for this bill.

There’s another point I haven’t heard raised in this debate, which is that Australia, Canada, and a number of European countries have recently strengthened their foreign investment regimes. Are the Opposition recommending we get out of step with those countries, because as a Government, we believe it’s important to be in step with some of our good friends, the likes of Australia, Canada, and some of those European countries.

So the point is that here we have a Government taking a long-term view, keeping these businesses in New Zealand for the long-term benefit of New Zealand. I commend this bill to the House.

It’s a pleasure to follow that contribution from Jamie Strange, realising that xenophobia is alive and well on the other side of the House. Let me be quite clear to that member as to how National will vote: National will vote to support it to the select committee, but gives no guarantee that we’ll support it after the select committee process. We’ve decided on that course of action because this is a complicated piece of legislation delivered at a time of crisis in New Zealand, and we accept that. But I think comments from Jamie Strange like “We don’t want to sell out New Zealand to strangers.” send all the wrong signals at this time.

The first piece of legislation that we’re rushing into this Parliament after the most serious Budget that’s been presented in my lifetime, potentially, sends all the wrong signals to the investment industry right throughout New Zealand and internationally. It sends the signal that New Zealand is closing its doors.

Now, I listened very carefully to the Hon David Parker as he introduced this legislation, and he talked about the need for it to protect those strategic industries that may be vulnerable because of the economic crisis of COVID-19—industries associated with the military, with the ports, with airports, perhaps electricity, perhaps even the media—and there is some justification for needing to make sure that those industries, who may become fragile and vulnerable, are recognised as strategic industries and are, therefore, subject to a strong regime and tests around foreign direct investment. But what Mr Strange didn’t realise with his contribution is that New Zealand already has a very, very strong regime around overseas investment.

The Hon David Parker talked about a threshold existing in the current regime of $100 million. Well, if the ports of New Zealand and the airports of New Zealand are now going to collapse to a value below that, and I certainly hope that’s not the case—but if it is, think seriously about adjusting that threshold. But the way I read the legislation, this means all foreign investment comes under the scrutiny of this new bill. I want the member opposite to consider Queenstown as it is today—desperate for jobs. I will guarantee before too much longer there will be a motel unit there, perhaps, of 20 or 30 units that will go bust and, potentially, it could have been sold to an overseas investor and saved a lot of jobs. But that particular threshold now means that that distressed business—a motel of 30 units, potentially—is considered strategic under this legislation and goes through yet another hurdle, if indeed this doesn’t chase off the potential foreign investor buying that.

What this country needs now more than at any time is business confidence, because confidence equals jobs. The Prime Minister delivered her Budget speech and talked about the Budget being a Budget for jobs. Well, think about that distressed motel owner currently in Queenstown, potentially, with a staff of a dozen people, who is about to go bust and wanting to find a way of getting some fresh capital into that business to keep those jobs there. This legislation threatens that.

I listened, particularly, with fear to the Budget speech from the Rt Hon Winston Peters, and he spoke with his normal xenophobic nature against foreign investment, spoke against the reforms of the 1980s—which I think were the saviour for the New Zealand economy—and spoke against foreign investment. He was the man who, three years ago, campaigned against any foreign investment into New Zealand’s second-largest meat-processing company, Silver Fern Farms—a company which was so vulnerable, it potentially could have tipped over—and, finally, there was some investment. Yes, it was foreign investment. It happened to be Chinese foreign investment, which will really worry the xenophobes on the other side of the House, but that company recently returned a $70 million profit and will pay tax to the Government. That’s what foreign investment can do.

So let’s be grateful that the Government will send it to a select committee for a short period of time to give us a chance to really examine the detail of this. But I can’t help thinking there were far easier ways to construct legislation that wouldn’t look as if New Zealand was closed for business and that wouldn’t turn people who have investment money, who are interested in New Zealand, off from considering New Zealand and send them to other opportunities that exist in countries like Fiji or Australia, because jobs are important. That’s what we need at this time.

So I say to the Minister that the select committee will examine the legislation. I warn the Minister that there is no guarantee that as the legislation comes back from the select committee, National will continue to support this legislation. I personally think it’s complete overkill and it sends all the wrong signals to our business community at a time when they’re asking for confidence in the Government. They’re asking for a Government that knows how business works, because this legislation suggests to me that many on that side of the House have not a clue what actually makes a business survive.

Te Māngai o Te Whare, tēnā koe. The Greens are pleased to support the Overseas Investment (Urgent Measures) Amendment Bill. Like all countries, New Zealand relies on overseas-based investment to contribute to economic growth. It can improve productivity, it can enhance export opportunities and improve employment, and it also brings new ideas, innovation, and relationships that connect us with the world. We want to be seen as an attractive place to do business where we get overseas investment which promotes a sustainable, productive, and inclusive economy, and we welcome that sort of investment.

But it’s also a privilege for overseas persons to own or control New Zealand assets. That is why one of the first things this Government did was to strengthen the ministerial directive to the Overseas Investment Office to close the loopholes that the National Government had opened so wide that it saw large areas of rural land being sold offshore. It was why one of the second things this Government did was the “one home to live” test, to reduce and avoid overseas speculation in our housing markets. We want overseas investment where it generates a sustainable, productive, and inclusive economy.

But in a COVID-19 world, which the Opposition doesn’t seem to recognise, there will be a major change. There will be businesses that become distressed, that are likely to fail, and that are significant businesses in the New Zealand economy.

💬 David Seymour: And now they won’t have any capital.

And it is wrong, Mr Seymour. If Mr Seymour read the bill, he would find that there are changes that streamline the way in which applications can be considered. One of the changes is to reduce the screening when low-risk investment is wanted by New Zealand companies and they want to access that lending from overseas. So it is making the Act more streamlined and the processes more efficient.

But there are distressed businesses which are a cornerstone of our tourism sector. We do not want those passing into overseas hands at the moment, if it is just because they aren’t able to do business at the moment. So that is why it is absolutely critical that we—as Australia has done, in reducing the threshold for screening to zero, in a COVID era—are doing that with this bill. It is for an emergency period only. It won’t last for ever, but it is intended to ensure that critical New Zealand businesses which are finding it difficult don’t end up being totally overseas-owned just because of that economic distress.

So the changes in this bill are part of the Government’s whole business response package. They’re ensuring that we’ve got the right checks and balances to protect businesses that are important to our national security, our economy, and our communities. The changes that I mentioned earlier in terms of streamlining, they will enable applications to go more quickly through the process, because the Office of Overseas Investment—contrary to what some National members have suggested—has been working to improve its practices significantly. It has been reducing the times required for applications to be considered and decided but has also sought to ensure that we recognise the privilege of owning things like rural land in New Zealand. So these lower-risk transactions won’t need to be screened and the application processes for remaining applications will be simplified.

In this whole area of a national interest test, that is to recognise that on this side of the House, we have significant infrastructure in the telecommunications space, in the technology space, and if it’s advising on national security issues, that it is in the national interest for applications to purchase those companies to be considered. Really? But the ability for the Ministry of Finance to consider those and see whether they’re purchased by overseas interests is actually in New Zealand’s national interest. So that is what this bill does. It provides the screening of any application to buy more than 25 percent of a New Zealand company by an overseas person, or to increase the investment stake by an overseas person beyond 50 percent, for this emergency COVID period. Then, when that is over, there will be this national interest test, which means applications will be screened, due diligence will be done—and, as Minister Parker noted, that will be done relatively quickly—and then, if needed, the Minister can intervene.

Also, to counter some of the points made by the Opposition, five years ago, the Overseas Investment Office was very poorly resourced. In Budget 2018-19, there was additional revenue provided to the office—particularly to work in the enforcement space—because under the previous Government, we saw very little action taken against those who broke the law. With more resources, there’s been more effort here, and what we’ve seen is a significant increase in the enforcement actions to ensure that the law is complied with. In 2014-15, there were three enforcement actions. In 2019-20, there were 43. This Government is about sound law, and then ensuring that law is enforced.

One of the other parts of the bill that Opposition members may be interested in is the issues around character, because, currently, if an overseas investor wants to acquire sensitive assets, the investor test must be satisfied. That means that an investor’s character, capacity, and capability are assessed to ensure that they’re not likely to act inappropriately or bring New Zealand into disrepute. Currently, that investor test requires a large amount of information to be reviewed. It’s time-consuming, both for potential investors and applicants and for the Overseas Investment Office, and that test only looks at the character of individuals, the directors, and those who control the company. What the bill is doing is ensuring that there is a simplified investor test, and it looks at the character of corporate entities and not just individuals. That should reduce the amount of information that is required and make the whole process much more streamlined.

So, in terms of the emergency measures, the simplification of some of the processes, and also the national interest test, we are ensuring that we protect the key parts of the New Zealand economy while also ensuring that the door is open for overseas investment, which assists in making a productive, sustainable, and inclusive economy. I commend the bill to the House.

The question is that the motion be agreed to. Those of that opinion will say Aye, to the contrary, No. The Ayes have it. A party vote has been called for. I’ll ask the Clerk to conduct a party vote, please.

Sorry—my apologies. Excuse me, I know we’re not meant to do this—this happened yesterday, too. Look, I don’t normally call the votes, and I shouldn’t have this time, because, in fact, the National Party has consistently said we do want to see this go to a select committee, although we have our reservations. So I apologise, but I need to correct our vote.

Thank you. I totally accept your apology, Mr Brownlee. Mr Seymour called for a party vote, so I’ll ask the Clerk to conduct a party vote.

I move, That the Overseas Investment (Urgent Measures) Amendment Bill be reported to the House by 25 May 2020 and that the committee have authority to meet at any time while the House is sitting (except during oral questions), during any evening on a day on which there has been a sitting of the House, and on a Friday in a week in which there has been a sitting of the House and outside the Wellington area, despite Standing Orders 191, 193, and 194(1)(b) and (c).

I suggest to the House that this is necessary because we’re in the midst, internationally, of a depression caused by COVID-19 that is predicted by many to be of a scale not seen since the Great Depression. The current regime for screening assets has no national interest test. It has only a freedom from corruption and ability to manage an asset test, and even then, those tests only apply to investments for most countries of $100 million or more; for investors from Comprehensive and Progressive Agreement for Trans-Pacific Partnership countries, $200 million; and for Australian investors, $500 million. So they’re very high thresholds and we think that with those high thresholds, in the absence of a national interest test, we need some more levers, and we think that this risk justifies progressing this through a shortened select committee process.

Many aspects of the bill will be enduring. The national interest test endures, albeit it with that higher threshold, but none the less we think that the interim measures justify a shortened select committee period.

We don’t think that that’s a reasonable thing at all. This is a very important bill. Every speaker that’s spoken so far this afternoon, including Government speakers, has been at pains to point out how important it is, and I think one week or, effectively, about three sitting days—or would-be sitting days’—time for officials, firstly, to get people to submit, and, secondly, for those people to be heard, even though we can now do it by Zoom and other such ways, and then for the report to be put to the House, is pretty unreasonable. If we look at some of the contradictions in the views on this bill today, it does show that there does need to be a select committee process.

I can appreciate some of what the Hon Eugenie Sage had to say. I don’t agree with most of it, because I have a different view about what the effect would be of any particular action, and I think it was very interesting and instructive that the Minister who just took his seat—the Hon David Parker—mentioned that we have pretty large thresholds with some countries that have been negotiated through the free-trade agreement arrangements. Now, one of the things that he immediately followed with is that we think we therefore need some more restrictions. Well, what does that do to those trade agreements, and in a time when we are desperate to maintain trade and desperate to maintain investment in business in New Zealand? Let’s be clear: trade and investment is about jobs; nothing else. You cannot say “jobs, jobs, jobs” if there isn’t a big focus on trade and investment, and I think the need for the public to understand that the Government is somewhat confused in the way it’s going about things is essential. So it is completely unreasonable that we are being restricted to just a one-week arrangement.

I’d like to amend the motion by the Hon David Parker in a reasonable way so that the report-back date for the committee is amended to Monday, 15 June. Now, that gives a full recess week next week, a couple of sitting weeks, and a recess week to get it back, and I think that would enable sufficient time or enough people to be able to come along to, well, firstly, get the bill—firstly, get hold of the bill—and read it and work out what it means for them. Just think about what it must be like if you are one of those people in Queenstown—the motelier that the Rt Hon David Carter talked about—with 30-odd rooms in probably a $7.5 million, $8 million, or $10 million complex. It has no occupancy at the moment, but it is a good asset, but it has a huge debt sitting over the top of it, probably to a bank here in New Zealand, and there is the need to either bring in an investor or to sell it to someone who can afford to sit on it for a long time.

I spoke earlier about the value of New Zealand accepting the Prime Minister’s proposition put to the House today that we will become a desirable location, perhaps not only for people to come to do all the business they like to do like tourism and education—and both might take a while—but also to be a haven for capital protection. The people on the other side of the House immediately recoil at the words “protecting capital”. That would be awful—a horrible thought to them. But if people find that New Zealand is a place where they can invest that relatively small amount to buy an asset and to mothball it effectively until the good times come, then that’s to our advantage. Otherwise, if that place falls down, it will be a fire sale, locally, and if it’s not a fire sale locally it will just sit there and it will deteriorate, and I tell you what, you don’t have to look too far into the Pacific to see a whole lot of failed assets that have massively deteriorated because of some of their particular views about selling assets to foreigners. So we do need to be quite reasonable about this and I think we do need to have the time in front of us to allow people to have a good look at it, to understand what it’s all about, and to offer an opinion.

There’s a second bill that’s coming that’s going to a select committee for three months—the normal time is six months—and that’s about right. That’s a good bill. We don’t necessarily agree with everything in it, but there are lots of things in it that are necessary for consideration when you are looking at ensuring that you get the right sort of investment in a country. But this thing, being rushed through so very quickly, overlaying the current arrangements, seems to me incredibly short-sighted, somewhat knee-jerk, and it was almost certainly cooked up by a group of cardigan-wearing officials in the back room somewhere who decided that they knew how the economy can best be protected. Well, the reality is it’s best protected by protecting the capital that New Zealanders have invested in the productive assets of the country, and if part of that means that someone who has capital from offshore is for a time able to invest and sit on it, then that is again, I say, to our advantage. These are the sorts of things that we need to hear in the select committee.

I know of one hotel chain that is a massive employer—600 people—and they’re going to have to put 80 percent of them off. Now, wouldn’t some investor that they might like to attract be a good thing if it meant that the carnage for that workforce was not so great? These are the sorts of things that we need people to come to the select committee and make the case for this bill being not quite as good as it should be.

I’ll go back to what I said before. I’ve amended the motion so that the select committee reports on 15 June, giving an extra couple of weeks—only a couple of extra weeks—to consider it, and let’s be clear: we’re in level 2 now. Level 2 is not reviewed for two weeks, so the level of activity that’s likely to take place during that time in tracking down someone to invest, and all that sort of thing, is unlikely to happen. So the pace that’s being put on here is completely artificial, and I think it’s probably designed to make the Budget look more robust than it really is.

All the Budget was was a massive expenditure and this sort of idea that “Don’t worry, the Government’s here to help.” Well, the Government can’t do that for ever. It just has to rely on the private sector coming up with the capital that’s required to keep the economy going. The Government can’t employ everybody, and it certainly can’t tax the death out of people who of course are getting their income from the Government. This is just so circular; it doesn’t really need any further explanation.

This bill, I think, is disappointing. On the one hand, we get the comment from the Prime Minister that “Yes, New Zealand can be a great destination for the rest of the world to look at, and capital protection will be part of that.”, and then we get this commitment from the Government that “We’re going to increase the wage subsidy. We’re going to keep New Zealanders in work. We’re going to really put all sorts of investment in all sorts of places, and not only are we going to put KiwiBuild behind us but we’re going to build 8,000 houses in the next very short while.”—in the next two years. Everyone’s going to really sit up and notice that one and take it on board.

So it’s all these things, and the other thing is we were supposed to have a bill right now that was going to make it easier to do some of these infrastructure projects that are going to employ thousands of New Zealanders, but that’s gone. Instead, the centrepiece of the Budget appears to be a bill that restricts foreign ownership—restricts foreign investment—and it’s the investment part that’s the worst of it, because you can just go through the history of New Zealand, as I said earlier, and then David Seymour stole some of my better lines in his speech and offered them to the House. It has been, since the 1800s; in fact, he took it back further. He’s a much deeper historian than I am. He took it back to Kupe. He left off the kūmaras, though—they were important—and ever since that time, investment in New Zealand is what has grown the country. So why are we today hastening the time that a select committee can scrutinise a bill that would be very helpful, if it didn’t exist—very helpful—for a whole lot of medium to large sized enterprises in the areas that the economy has been so devastated in: primarily, hospitality and tourism?

So I hope that the House will be good enough to recognise that just a little bit of extra time—just those extra two weeks—might be a good thing. It might be a reasonable thing for the public and also for all of the particular operators and investors in these sectors so that they can understand what the Government’s doing. I mean, we’re going to help them anyway—there’s no question about that. They need to know that this is not a positive thing; it actually sets out to achieve exactly the opposite to its purpose. Then, I think it would be a conscious decision for the Government—a much more conscious decision for the Government—to say, “We’re going ahead with it and we don’t care. We have no interest in New Zealand’s small business accessing the capital it needs from offshore.”

Before I call the next speaker, firstly, I forgot to say that the question is that the motion be agreed to, but Mr Brownlee, obviously, knew what we were debating. Can I also say that I know there’s a lot of pent-up energy because we haven’t been debating as much in the last couple of months as we might have, but I don’t think that we need to use that energy to criticise public servants who don’t have the opportunity—there are 119 members in the House that we can criticise, so perhaps leave public servants out of the debate.

I move, That the question be now put.

Thank you, Madam Speaker, and I just want to pick up on your comments. I thought that the Hon Gerry Brownlee’s comments about civil servants and cardigans were most unfortunate and really damaging to the reputation of this House, and I’d just like to redeem that by putting on record that a cardigan—

ASSISTANT SPEAKER (Hon Ruth Dyson): Mr Seymour, that doesn’t require you to repeat an insult. You could be better than that.

OK. Well, I was trying to redeem it by saying that it’s actually a very practical garment, more comfortable than a jacket, more formal than a sweater, and should actually have a place in everyone’s wardrobe, and there’s nothing wrong with wearing a cardigan.

💬 Hon Gerry Brownlee: I raise a point of order, Madam Speaker. Thank you, Madam Speaker. I reflect on your admonishment, and I do want to withdraw and apologise. I must also say that at a previous time, dealing with a different, much, much smaller crisis for New Zealand, we were very reliant on the work of State servants. I do appreciate that they do good work. My real point was that I don’t think they’re the sole repository of good ideas, but I do apologise to them and the House for any reflection that might come from the House on them.

ASSISTANT SPEAKER (Hon Ruth Dyson): David Seymour, you do know the motion that we’re referring to and debating?

Oh, very much, Madam Speaker.

ASSISTANT SPEAKER (Hon Ruth Dyson): Excellent. So you’ll speak to it?

Yes, I certainly will, and I think it’s unfortunate you’d insinuate that I wouldn’t. It should have been clear that I was supporting you in not wanting this House to in any way denigrate civil servants.

The motion, of course, as you know, Madam Speaker, and people at home know and people on both sides of this House know, in fact, is whether or not this bill, making significant changes to the rules for foreign investment in New Zealand, should go to a select committee for only 10 days or, as amended by the Hon Gerry Brownlee, for about three weeks. I’m speaking in opposition to that motion, for a couple of reasons. One is that a select committee process of that length can’t practically be a meaningful one—so that’s the first point here. The second is that failing to have a meaningful process around making this law, that affects the ability of foreigners to do business with New Zealand business people, risks imperilling New Zealand’s reputation at a time when we’ve had a series of legislative initiatives or, I might say, blunders that have done damage to our reputation.

Let me just start with why it would be an inadequate select committee process. Asking the House to report back in 10 days, or even three weeks, does not give adequate time for people affected to consider their submissions. They’ve got to read the bill, understand it, get advice, put their submission together, and send it in. So in order to get public feedback, you need at least a couple of weeks. Then those submissions have to come to the committee and be read by the members, who have to understand them, and then they have to bring the submitters in, if they wish to make an oral submission in person. They’ve got to listen to that and contemplate and cogitate, and then, with the help of the committee officials, deliberate and report and suggest amendments to the bill—none of that can happen.

So the first point I make is that if we shorten the select committee process, either to 10 days or to Mr Brownlee’s 25-odd days, we are going to have an improper select committee process. It will not be good lawmaking, and that matters to this House. There’s nothing to say New Zealanders have to follow the laws made by this House. They, by and large, choose to because they believe we have good processes, that we listen, and that we represent them, and we erode that trust at our peril.

But the second issue is that this legislation is happening in a context where there are already reasons why people in the international business community are having second thoughts about New Zealand as a safe destination to invest and to send capital. I’ll just give you two examples. The recent oil and gas exploration ban: if you talk to people in that industry, they look at the process under which it came about. The Prime Minister announced it. Allegedly, there wasn’t even a Cabinet paper, and the legislation followed in a rushed fashion later on. That has sent shock waves through people in that industry when it comes to investment in New Zealand.

Maybe that’s what the Government wanted, but even if it was, what they’ve shown is that rushed and unexpected processes diminish the confidence of people who want to invest in New Zealand, because they basically say that New Zealand’s actually a very difficult place to find oil and gas and to extract it, and once you get it out, it’s still in a very remote location in the global context. So it’s hard yakka doing oil and gas in New Zealand. But at least when you invest in New Zealand, you know it’s a First World country with robust democratic processes, very good institutions, the rule of law, and your property rights are safe, so New Zealand’s still worth it. We imperil that at great cost to ourselves.

The second example—and, ironically, this evidence was presented to a select committee—was the Overseas Investment Amendment Act which happened back in early 2018. I, as a member of the Finance and Expenditure Committee, heard from many people who came and submitted, and they said, “You guys have no idea what’s going on out there.” These are people who are Kiwis who do business around the world in places like New York and Singapore, and they said people are looking around and they are saying, “WTF is happening in New Zealand right now? We thought this place was actually safe. We thought it was a great place to invest. We thought that this place welcomed foreign investment.” They said, “If you guys keep doing stuff like this, it’s pretty simple: people might still invest in New Zealand, but they will add on a premium for sovereign risk. They will charge more to loan to New Zealanders, because they see the risk of a country that increasingly legislates at haste and repents at will, a country that does not uphold its own processes, that rushes legislation and erratically imperils our property rights when we invest in their country.”, and that is what’s at stake here.

If this Parliament continues to legislate at haste and repent at leisure to rush legislation through with shortened select committee processes to try and introduce arbitrary ministerial discretion—as this bill does—into whether someone can invest here, then what we are going to find is that people around the world are going to expect a higher premium when they invest in New Zealand, a higher premium for sovereign risk, and what I’d say to the House and say to the Government is that it can’t be one or the other. If there truly is an urgent need to stop some sort of inflow of foreign capital—heaven forbid—and there is some sort of security issue that the Government knows about where perhaps some foreign power is seeking to overtake strategic assets—you know, it’s funny, everyone loves saying “strategic assets”. No one that’s ever said that has been able to tell me what strategy they’re referring to, but I leave that aside.

If the Government knows that there’s an urgent security threat to New Zealand or that a foreign power wants to orchestrate a takeover of assets important to New Zealand’s security and economy, then they shouldn’t be waiting. They should be doing it straight away. But if all we’re worried about is some beleaguered hotels that are trying to keep their staff employed—might get a welcome source of capital from offshore investors—then there’s no urgency required whatsoever. In fact, we shouldn’t be trying to impede that sort of activity at all.

So the Government can’t have it both ways. Either they should do a full select committee process where, hopefully, the complete madness of this legislation will be revealed and they’ll back down, as they occasionally have—I’ll give them credit—once or twice in the course of this Parliament, or, if there’s truly a serious and urgent threat to New Zealand, they should be doing it straight away. But a 10-day, bogus select committee process will damage our international reputation and make New Zealanders pay more for capital. I oppose this motion. Thank you, Madam Speaker.

I move, That the question be now put.

Madam Chair, thank you for giving me the call. I rise to support the amendment by the Hon Gerry Brownlee, and I do so for six reasons. The first one is that we have listened to a Budget this afternoon where $50 billion has been set aside to help the country through the COVID crisis, but I cannot understand how this piece of legislation hinges off that Budget and why, as a result of the Budget, this is so urgent. I haven’t been able to understand that connection. Therefore, I wonder why, in the context of calling for urgency on this matter, it is being done today.

The reason I raise that is this House has sat for three weeks, and if it was so amazingly urgent—

ASSISTANT SPEAKER (Hon Ruth Dyson): I’m really sorry to interrupt the member, but the time has come for the House to adjourn for the dinner break.

Sitting suspended from 6 p.m. to 7.30 p.m.

💬 DEPUTY SPEAKER: The House is resumed. When we rose for the dinner break, we were debating the instruction to the Finance and Expenditure Committee and the Hon Gerry Brownlee’s amendment to it. Andrew Bayly had the call, and he has nine minutes and nine seconds remaining if he so wishes.

Thank you, Madam Speaker, and I must admit, I compliment you on what you were wearing this morning. It was the same colour as the bright sunrise that we all faced on the morning of the Budget and, I think, very appropriate given the debt figure that was mentioned today of $50 billion of additional borrowing.

So, just turning back to the Hon Gerry Brownlee’s amendment, which was to extend the report-back date to give more time for a proper consideration of this bill, I was speaking to this bill, and I agree with it. In fact, I think there are six reasons why we do need to have an extended time frame so that this bill can be properly considered. I talked briefly before the meal break, but the first thing is in the context of the Budget that was discussed today, I cannot see the relevance of this piece of legislation and how it links back to the Budget.

I would’ve thought the purpose of today was to go into urgency to make sure that the Government is achieving all the most pressing issues that relate to the Budget. But this issue wasn’t actually discussed in the Budget and I can’t find reference as to why this particular bill needs to be even discussed today under urgency, and, secondly, why it needs to be convened. Under the current proposal, it would be debated over the next three days of next week and reported back to the House the following Monday, which is a very, very short period of time.

The other reason why I think the Hon Gerry Brownlee proposed this three-week extension is that this bill is actually quite technical in nature. It’s got a whole number of facets, but two of particular relevance: one is the definition of what is now a foreign investor. Under the current rules, if someone has a 25 percent investment, that is deemed to be a foreign investment, and it triggers a whole lot of clauses and requirements under the Overseas Investment Act. But there have been changes to those rules, and they need to be discussed to make sure that we’re actually coming up with rules that smart people cannot set about trying to work a way around them so that they don’t come under the requirements of the Overseas Investment Act. That needs some time to think about that and make sure that it’s appropriately drafted, and the other one is quite a substantive change.

Under the Overseas Investment Act, currently, if foreign investors are looking to buy a New Zealand investment, they have to do what’s called a counterfactual argument, which is to say that this is what the best New Zealand investor would have done with this asset that they’re proposing to buy, and the foreigner has to then substantiate not only would they meet that test of what the best New Zealand investor, with all the resources—no limit on that—would do, but what in addition the foreign investor brings to that investment. That counterfactual test, under this proposed bill, is going to move to what is called a before and after test. Again, if we do want to enshrine some legislation that has permanence around it and is long lasting and acceptable to foreigners as well as to New Zealanders, I think that’s a very substantive technical change. So those are two examples why I think the technical nature of this bill requires a lot more consideration than our hoping some people are going to turn up and our just relying on advice from officials, which may be very pertinent, but may not encompass all the various aspects.

The third thing that has been talked about when we were talking about the previous Overseas Investment Office amendment is the possible need for security services to provide some input on this aspect. There has been no briefing provided to the Opposition on this issue, which I think is a real mistake. That briefing would have to be undertaken next week, and, of course, the availability of those people and how people actually hold those meetings—because it certainly wouldn’t be done over the internet with the current Zoom arrangements. They would need to be held in person, and I think there’s a recess week next week. I think the logistical issues of that are quite significant as to whether, in fact, that can take place and be communicated in a way that it ought to, given the sensitivity around some of those discussions.

The fourth thing is a matter that was raised earlier as well, and I think it’s particularly pertinent. If we make these changes to the Overseas Investment Act, what is the implication of that on our free-trade agreements? As many people in the House know, we’ve got a multitude of free-trade agreements, and, actually, we have different standards of free-trade agreements. Some are much more comprehensive—such as our favoured nation status with the Chinese Government—through to other ones that are less comprehensive. Now, again, that is quite technical, and if you were to make these changes, the implications on those free-trade agreements are a really, really important consideration, because, potentially, if we impose something that is outside the reach of those foreign trade agreements, we could be taken to the World Trade Organization in some form of dispute. That would be the last thing that New Zealand needs at this point of the economic cycle, where we’re right at the bottom and we’re wanting to further expand our trading relationships.

The next issue is we actually need some submitters, and if we’re going to hold it next week, even if we pass this bill tomorrow or late tonight, the officials will have to do the logistical issue of working out who they’re going to go and hear from, provide those submitters with a copy of the bill—which, literally, has just come out today—and give them enough time for them to come down or to have a hearing sometime next week, and that presupposes that all those people are available next week to make submissions. Whilst that may be possible with our domestic advisers and all those people involved, one of the things I’d actually hoped we’d hear from is foreigners who are looking to invest in New Zealand, to hear their issues with this bill and their context around it, and whether it still works for them, because I think that’s a real test. If we are to tighten up the rules, we need to make sure we don’t do it in a way that people mistakenly take a view that this bill is actually anti - foreign investment. I think that is an important consideration.

Again, I’d just say to you: I just literally do not think there is sufficient time to actually get a reasonable number of submitters to make a high-quality submission in a matter of just two or three days. I just literally do not believe that’s going to take place.

The last thing is I just think we are treading on dangerous ground. If we get wrong this bill and the one that we discussed just before, the related overseas investment bill, the potential damage to New Zealand as a First World country, as someone who welcomes the right type of foreign investment, something that’s going to support the New Zealand economy as we go forward from this incredibly difficult time over the next few years—if we get this wrong and if our trading partners and our potential investors in New Zealand see it in a different light, then that is, potentially, incredibly damaging to future trade in New Zealand in export markets, and I just think that is a risk we cannot take. That’s why I strongly support the amendment by the Hon Gerry Brownlee that we extend the time frame to an extra three weeks to give us sufficient time to make a quality submission and report back to the House so that there’s a proper consideration of the matter. Thank you very much.

I just want to make a brief call, with three succinct points in support of the amendment moved by the Hon Gerry Brownlee with regards to extending the select committee process out to 15 June. My first point is that in all reality, the current deadline that’s been proposed by Minister David Parker is nothing but a sham select committee process. To introduce a bill tonight under urgency, expect people to take note of the ramifications of the legislation to acknowledge that we’re in a lockdown currently, at level 2, to submit sensible submissions to the select committee, and for us then to have a select committee process to hear them when, again, we’re all in lockdown and in recess week, I truly believe that unless it’s extended, it’s, effectively, a sham select committee process.

My second point is based on the history of the Overseas Investment Act (OIA), which was one of the first pieces of legislation passed by the Labour - New Zealand First - Greens Government after the last election. I sat on the Finance and Expenditure Committee with that particular legislation and we had literally hundreds of submissions. There was a lot of interest in that legislation, and the important point about those submissions is they were constructive and caused us to substantially change the legislation.

I’ll give you two examples. One was a very good submission from a company called Conrad Properties. They argued before the select committee that the legislation as proposed would change their business model to the extent that they would not be able to build the apartments they currently had under way in Auckland, because their business model was based on pre-sales, many of them to overseas investors, and, lo and behold, the Government listened to that select committee submission and they changed the legislation to allow that company to continue to operate. We know, subsequently, that that company was a substantial donor to political parties, and to one party in particular—New Zealand First and the foundation—and I’m sure that had no influence on the quality of the submission and the decision of the Government to change the legislation.

I’ll give you another submission that came to our notice. A number of the forestry concerns were concerned that the proposed legislation would, effectively, gazump the Government’s own target of a billion pine trees to be planted—a billion trees. Again, and I recall from memory it was Supplementary Order Paper 209, which suddenly came in and changed the regime around forestry and liberalised it to allow overseas owners to come in.

💬 Andrew Bayly: 1,000 hectares, was it?

I think it was 1,000 hectares they could buy without even having to go through an OIA process.

The point I’m making is good submissions come before the select committee. If they’re constructive, they’re adhered to, and we change the legislation, and then this Parliament thinks it’s got better-quality legislation coming through.

The third point I want to make is the effectiveness of extending it out to 15 June. We had in the debate on the introduction of the legislation the Hon David Parker talking about the rationale for this legislation is to protect strategic assets. Does the Minister truly believe that there’s a deal being negotiated now, under the COVID scenario that this world faces, where any of those strategic business potentially can be sold and not affected by the current overseas investment regime? The answer to that has to be no—there is no possibility of a deal being done and concluded by 15 June.

So, on those three points alone, Gerry Brownlee’s amendment deserves serious consideration by this Government. If it’s prepared to acknowledge that the legislation introduced under urgency requires a select committee process, let’s give it a minimal select committee process that at least is constructive and realistic.

The question is that the amendment in the name of the Hon Gerry Brownlee to amend the report-back date to 15 June 2020 be agreed to.